Speech by President Barroso at the European Parliament plenary debate on the European Council, 24-25 October 2013

European Parliament plenary debate/Strasbourg

23 October 2013

President,

Honourable members,

Ladies and gentlemen,

This week's European Council will discuss a range of very important topics: the digital economy, innovation, services, youth unemployment, financing of the economy, regulatory fitness, EMU and economic governance, EMU and the social dimension, the Banking Union, Eastern Partnership and migration.

My main message to the European Council tomorrow is that over the next weeks and months, the European Union can, and must, achieve concrete results in all these areas. Many of our initiatives can be brought to a successful conclusion even before this House rises ahead of next May's elections. But I will make it clear that we can only deliver if there is the necessary political will also among our Member States.

Just yesterday, as you know, the Commission approved a very substantive Work Programme for 2014. So there is a lot to do.

Honourable Members,

The thematic focus of tomorrow's European Council will be on innovation and the digital agenda.

Digital services, telecommunications, e-government and skills are the drivers of tomorrow's growth and productivity. Even in the crisis this is a sector that has continued to show growth potential; and we predict there will be nearly one million ICT job vacancies unfilled in the coming years, which is unacceptable given the extent of youth unemployment we face. This is why the Commission has launched the Grand Coalition for Digital Jobs, a multi-stakeholder partnership to exploit the employment potential of ICT.

We need a thriving digital sector to drive all other parts of our economy, and the internal market for telecoms has to be at the heart of this problem. We must urgently address the underlying shortcomings and create the right environment for investment. There is now a major reform package for the telecoms sector on the table. Let us all make maximum progress on this file by the end of this legislature.

This package complements a number of important recent proposals on the completion of the Digital Single Market, for example on reducing the cost of deploying high-speed broadband networks, on е-invoicing in public procurement, on cyber-security and on electronic identification and trust services for electronic transactions. These too are in your hands, and in the Council's hands, and I hope the European Council will throw its weight behind the call to finalise them in the months to come.

Honourable Members,

We need to build this Digital Single Market in a manner that is consistent with our European values. That includes making sure that those who operate in the online world do not escape from fair taxation. The Commission is actively working on a series of measures to fight against tax evasion in general, working with the G8, G20 and OECD. But there are some specific challenges which are posed by new digital business models which existing tax policies may not yet fully address. This is why yesterday the Commission decided to set up an expert group on taxation in the digital economy, which will report by next summer.

Core European values, namely the respect of fundamental rights, including the right to privacy and security, also matter just as much on-line as off-line. Recent disclosures concerning surveillance activities have cast a shadow in European Union citizens trust in digital services. We need to combine the digital agenda with a better framework for protection of data and privacy rights. Trust in the data-driven economy has to be restored not only for the needed confidence but also for its potential impact on growth. I therefore strongly welcome this week's vote in the Committee for Civil Liberties, Justice and Home Affairs of this Parliament, lending its strong support to the Commission's proposals. I want to thank Parliament for the priority which it attaches to this file. We should do all we can to conclude this much-needed modernisation and strengthening of the EU data protection rules before the end of this legislature.

The other thematic priority for this European Council will be research and innovation. The evidence is there: Member States that have continued to invest in innovation have fared better in the current crisis than those that have not. We will need to increase our efforts – public and private - to keep up with international competition.

International investors are now finding their way to Europe but business research and development expenditure in the EU is far below that of our main competitors. The crisis has also taken its toll with a decrease in public spending on R&D in 2011.

Europe is lagging behind, in particular in fast-growing markets and high tech. If no action is taken, the EU may miss out again on fast growing markets linked to the technologies which tackle societal challenges.

The Commission has recently launched an Indicator of Innovation Output to focus attention on the right R&D policies. But additional investment in R&D makes no sense without critical structural reforms of national research and innovation systems. The Commission will continue to push for reforms to create a true European Research Area. We must enable the mobility of researchers and provide open access to publicly funded research results and transnational access to research infrastructures.

Creating the right business environment is also key to stimulating growth. That is why this Commission is removing unnecessary burdens on business across all policy areas. The Commission has since 2005 repealed 5590 legal acts and reduced the administrative burden by 32.3 billion euros.

And we are determined to go further. In our Communication on Regulatory Fitness, REFIT, we have just launched a programme to further simplify legislation. We plan to withdraw some pending proposals and repeal existing laws which no longer serve their purpose. We act where action is needed at European level. We should not act where it can be done better at national or sub-national level.

At the European Council tomorrow, I will be looking for a strong endorsement of the REFIT programme. But let me be clear. This is neither about calling into question established policy goals. Nor should it be a battle of competencies between Brussels and national capitals. This is about the right dose in using existing competencies in full respect of subsidiarity and proportionality. I also expect Member States to cut red tape at their level and avoid "gold plating" EU legislation by adding new national burdens to European rules.

This brings us, Honourable Members, to another issue I have repeatedly stressed in this House, as well as in the European Council, financing the economy. This remains one of the biggest bottlenecks in the European economy. Even with growth returning, confidence and pre-crisis lending patterns will not return quickly. We need to unblock the flow of credit and help businesses, especially SMEs. Frankly I am disappointed that the Member States are not more ambitious here. And I will tell this tomorrow to the European Council.

Honourable Members, in some countries, the EU budget will be by far the most important source of public investment over the next few years. These funds will help kick-start private funding as well, which is key to future growth.

The preparations for the next MFF come a very long way but we are not yet there. We need a final push from all concerned in order to conclude. This is of utmost importance and urgency for many of our Member States and for many of our regions. Without the budget of the European Union they will simply not be able to invest, because they have no fiscal space to do it. I can assure you that the Commission will continue to do its utmost to facilitate a fair and balanced outcome between the European Parliament and the Council. An outcome as close as possible to the Commission's level of ambition, something I know the Parliament shares.

Honourable Members, you know that, together with the EIB, we have also looked into other, alternative instruments of financing the economy, including forms of risk-sharing by pooling and leveraging parts of the EU funds and EIB loans. I will call upon Member States to bring forward concrete pledges, and go beyond the status quo. We are not asking Governments to renounce part of their funds. We are asking Member States to increase the effect of the funds, notably for the benefit of SMEs - who suffer the most from the fragmentation of Europe's credit markets.

Equally important in our comprehensive crisis response is that we move forward on the road to a deep and genuine Economic and Monetary Union. In this sense the European Council is an intermediate step towards decisions in December, but every step is necessary. Completing the Banking Union in particular is the one most significant and important advance we can make to end the unfair distortions of lending conditions in financial markets. So it must remain our absolute priority for the euro area.

I congratulate the co-legislators on the final approval of the Single Supervisory Mechanism. Now we have to find a final agreement on the directive on bank recovery and resolution and a political agreement in Council on the Single Resolution Mechanism by the end of the year. Our goal must be to conclude negotiations with this House in the spring. I want to thank the European Parliament for its efforts and the hard work that has been done to prepare its position for these discussions.

We also need to pay attention to the balance sheet assessment and forthcoming stress test exercise in the banking sector. The Commission will support the European Central Bank and European Banking Authority in any way possible in that important work. We also expect Member States to do their homework in terms of ensuring the availability of any necessary backstops – in line with state aid rules – should private solutions not be adequate, and in terms of the full cooperation of national supervisors to bring this exercise to fruition.

Honourable members,

We have made significant progress as regards economic governance in the EU, in particular as regards the country-specific recommendations which are the end-point of the European Semester. But we must continue our efforts to strengthen economic policy coordination, in particular within the euro area. We must make further progress on identifying the policy areas which require coordination, including ex-ante coordination. On the other hand, the implementation of the country-specific recommendations is not yet optimal, which is also due to insufficient ownership by each Member State of the recommendations which are addressed to them. The widening of these to the social and employment dimensions will surely contribute to enhance ownership.

As you know the Commission has presented a Communication on the social dimension of the Economic and Monetary Union. One of the core proposals is stronger surveillance of employment and social challenges and policy coordination. The role of the European Parliament is crucial in this regard. The Commission will cooperate with the European Parliament to select the indicators to the Alert Mechanism Report and will discuss with European Parliament the new scoreboard of key social and employment indicators. The Commission intends to make use of those indicators in the forthcoming Alert Mechanism Report. Moreover in the Annual Growth Survey – to be adopted by mid next month - the Commission will present a first overview of the implementation of the country-specific recommendations. We will not reduce our efforts in making the European Semester the real tool for economic coordination in the European Union.

We must also step up our efforts to fight against youth unemployment. In June the Commission proposed the frontloading of the social funds so that the initial 6 billion euro is invested in the first two years. Adopting the necessary regulations is a matter of urgency and of concern. We are approaching the programming period. Member States with the support of the Commission are in the process of finalising the design of the Youth Guarantee Implementation plans and Youth Employment Initiative (YEI) programmes.

Honourable Members,

While moving forward on our internal priorities we should not lose sight of our external responsibilities, in particular our close neighbourhood. This European Council will prepare the Eastern Partnership Summit which will take place in Vilnius later in November.

The European Commission launched this initiative back in 2009. Four years later we are now in a position to deliver on our common objective of political association and economic integration with our Eastern partners. Our common goal is to conclude Association Agreements, including Deep and Comprehensive Free Trade Areas. The free will of these countries must be respected by everyone. Of course, we also expect our partners to keep and deliver on their commitment to the reforms and to the values that underpin these partnerships. I therefore launch from here an appeal to Ukraine to fulfil the remaining benchmarks and seize the opportunity of the extension of the Cox-Kwasniewski mission. I believe the next weeks are critically important for Ukraine and I make a strong appeal for us and for Ukraine to reach progress in that process.

Honourable Members,

Last of all, and importantly, after the awful and all too frequent tragedies in the Mediterranean, migration policy too will feature heavily at this European Council.

As you know, I was in Lampedusa two weeks ago, accepting an invitation from the Italian authorities, and of course I was profoundly touched by what I saw. The images will remain impressed on me for ever. I was there to express the European Commission's understanding and solidarity to the local and national authorities and to the people of Lampedusa and also to offer concrete aid to the Italian authorities, which we have done.

We must all do more to prevent tragedies like this. I hope the European Council will pave the way for a new chapter in the common management, common responsibility and cooperative management at European Union level of migration policies.

There are no magic or immediate solutions, and we need to be realistic. But the character and the scale of the problem calls for stronger measures to organise search and rescue operations to save lives in danger, to better protect our borders and effectively tackle the criminal networks behind the migration flows and to protect those in need. In this sense, and knowing well that most responsibilities and competences lie at national level, more has to be done in terms of cooperation with countries of origin and transit and of Member States' efforts on resettlement. It's quite clear that Europe cannot turn its back when seeing this kind of humanitarian tragedy.

These elements form part of the solution, but first and foremost we need the political will. The Commission is doing its part, and, for example, was now requested by governments to lead a Task Force with Member States and EU Agencies such as Frontex, the European Asylum Support Office (EASO) and EUROPOL. We must not allow the momentum on such vital issues to be fuelled by tragedies alone.

Concluding, Honourable Members,

In all these files, we need to get the solutions where they can be found, working together to make them really produce results. I think there are no excuses, and the opportunity to go forward before the elections is there.

There are efforts directly aimed at the welfare of our citizens. But there are also efforts which are critically important for the credibility of our institutions, to show that in fact we bring solutions to the problems of our citizens.

So I am convinced we can continue to work in this together, with this spirit of achieving results.